Tax cheats reveal themselves in record numbers

Canadians have been confessing in record numbers to having dodged income taxes, iPolitics has learned.

The most significant increase is among those who have stashed money and assets in offshore tax havens.

Figures obtained from the Canada Revenue Agency show that 12,128 people came forward in 2009-10 to declare unpaid taxes — the largest number of people since the voluntary disclosure program began in 1973.

In 2009-10, the agency identified $1.8-billion in unreported income, resulting in $550-million in federal taxes.

That is up nearly 14% from 2008-09 when 10,639 Canadians came forward to disclose $766-million in unreported income and pay $575-million in federal taxes. In 2007-08, the agency reports, 9,137 people made voluntary declarations of $777-million in unreported income and paid $373-million in taxes to Ottawa.

In 2006-07, when 9,011 people came forward, they reported $614-million worth of income and paid $527-million in tax.

Under Canada’s tax system, taxpayers who confess to unpaid taxes can face more lenient treatment than they would if the Canada Revenue Agency begins an investigation into their finances.

Instead of prosecution, a taxpayer who makes a voluntary declaration simply has to pay the taxes owed plus interest.

Former Conservative prime minister Brian Mulroney, for example, voluntarily disclosed more than $200,000 in cash payments he received from German-Canadian businessman Karlheinz Schreiber, several years after the fact.

While the agency says it has seen an increase in all kinds of disclosures, it says the most significant increase is taxpayers disclosing offshore accounts.

Former revenue minister Jean-Pierre Blackburn, whose time in that office corresponded with a nearly 30% increase in the number of people disclosing unpaid taxes, says a lot of it stems from the steps he took to obtain lists of Canadian clients of banks in offshore tax havens like Switzerland and Liechtenstein.

For example, Mr. Blackburn asked France for a list it had obtained of Canadians with offshore bank accounts.

“All of that was known by the public so at that point people with that kind of account got more nervous,” he said.

The result was that people who feared the agency was about to learn their names came forward voluntarily, Mr. Blackburn said.

“When we pinch them, it’s much more serious.”

Mr. Blackburn said one of the reasons he focused on the problem as revenue minister is that it isn’t fair for some to avoid paying their share of taxes.

“When someone doesn’t pay what they should pay, it is other Canadians who have to pay more because others find a way to dodge taxes.”

Opposition critics, however, say the people who have come forward are just the tip of the fiscal iceberg when it comes to avoiding Canadian taxes.

Daniel Paille, Bloc Quebecois finance critic, says the growing number of voluntary declarations is a positive step but the bigger problem lies in Canadian companies, such as banks, that use tax havens to avoid paying Canadian taxes.

“It is a drop of water in an immense sea.”

Mr. Paille said he doesn’t believe the Conservative government has the political will to go after the many billions of dollars Canadian corporations have stashed offshore.

This entry was posted on Sunday, December 5th, 2010 at 10:07 am and is filed under Equality Debates. You can follow any responses to this entry through the RSS 2.0 feed.
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